Proposition C, SF’s homeless service tax, explained

What’s Proposition C?

Proposition C will will increase gross receipts taxes by slightly more than 0.5 percent on companies with more than $50 million in annual revenue and use the money to fund homeless services in the city, potentially raising hundreds of millions of dollars for city initiatives.

Who’s behind it?

Our City Our Home SF—a grassroots campaign that includes several homeless advocacy groups—put up Proposition C through a petition campaign earlier in 2018.

What impact will it have on San Francisco?

City Hall economist Ted Egan estimates that if passed, Proposition C will raise $250-$300 million per year, roughly a 78 percent boost to the city’s homeless relief budget.

Egan also anticipates a 0.1 percent decline in the city’s employment growth as companies try to dodge the tax by relocating some jobs elsewhere. This adds up to 725-875 potentially lost positions every year, with retail and hospitality taking it the hardest.

[Correction: Egan actually predicted those losses over a 20 year period, not one. Which, yes, is a rather significant difference in terms of regional impact.]

The back story

Depending on the count, San Francisco has between 7,000 and 8,000 homeless residents at any given time, a figure that’s remained essentially static for the past five years.

From 2017-2018 the city spent $380 million on homeless services. Although the city’s anti-homeless initiatives have garnered praise for its Navigation Center model, the actual homeless population has yet to significantly decline.

Earlier this year, a United Nations official passing through San Francisco compared conditions for the Bay Area’s homeless residents to those in third world countries. Speaking of the contrast with the region’s remarkable wealth and economic success, Special Rapporteur Leilani Farha said, “There’s a cruelty here that I don’t think I’ve seen.”

Arguments for

The Our City, Our Home campaign argues that “the status quo is unacceptable” and that the scope and severity of San Francisco’s homeless problem—exacerbated by and in conjunction with the housing crisis—demands significant action and more funding.

The tax will affect only the largest and wealthiest of SF businesses, and a significant part of the Proposition C argument hinges on the fact that these companies received very large federal tax cuts this year, with Our City, Our Home suggesting that with the money saved at a federal level that very large local businesses can afford a comparably minuscule local tax hike.

Marc Benioff, CEO of Salesforce, the city’s largest employer and one certain to be affected by Proposition C if it passes, says that funding more homeless services is a moral obligation for companies enjoying the success of the tech boom, saying “homelessness is all of our responsibility.”

Arguments against

The San Francisco Chamber of Commerce opposes Proposition C on the grounds that it will lead to job loss and argues that San Francisco businesses pay enough local taxes as it is.

San Francisco Mayor London Breed promised homelessness relief as a part of her 2018 campaign but opposes Proposition C, complaining that the city needs “to get better at deploying the resources we have” and demanding more shelters, more beds, and better service without a tax increase.

State Sen. Scott Wiener and Assemblymember David Chiu came out against Proposition C along with Breed, with Wiener calling Proposition C “the largest tax increase in San Francisco history ” and criticizing the principle that tax money be set aside for homeless services only.

Twitter cofounder and CEO Jack Dorsey also came out against the measure, debating the proposition over social media with Benioff.

Supported by

• Nancy Pelosi
• Mark Leno
• Marc Benioff
• GLIDE
• St. Anthony’s Foundation
• SPUR

Opposed by

• San Francisco Chronicle
• Mayor London Breed
• State Sen. Scott Wiener
• Assemblymember David Chiu
• Lt. Gov. Gavin Newsom
• San Francisco Chamber of Commerce
• Jack Dorsey

Further reading

• November 2018 Voter Guide [Curbed SF]
• Is Proposition C the right move for SF homelessness? [Curbed SF]
• San Francisco has 7,499 homeless residents by latest count [Curbed SF]
• City says homeless tax will generate millions but cost jobs [Curbed SF]
• Benioff pledges millions for homeless tax campaign [Curbed SF]
• UN expert decries homeless conditions in Bay Area as ‘cruel,’ ‘unacceptable’ [Curbed SF]
• Twitter CEO Jack Dorsey tweeted off over homeless tax [Curbed SF]
• Who’s Supporting San Francisco Prop C? [Yes On C]
• Senator Wiener’s Statement Opposing Proposition C on the November Ballot in San Francisco [Scott Wiener]